FairPoint Communications 2006 Annual Report Download - page 78

Download and view the complete annual report

Please find page 78 of the 2006 FairPoint Communications annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 150

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150



As part of the Unite, Cass County, GITC, Berkshire and Bentleyville acquisitions, the Company has recorded intangible assets related to the acquired
companies’ customer relationships of $13.8 million. These intangible assets will be amortized over 15 years using the straight-line method. As of
December 31, 2006, accumulated amortization related to the customer relationship intangibles was $0.6 million. The intangible assets are included in
Intangible Assets, net on the Consolidated Balance Sheet. Amortization expense related to these customer relationship intangibles is expected to be approximately
$0.9 million per year over the next five years.

A summary of property, plant, and equipment from continuing operations is shown below (in thousands):

  
Land — $ 4,256 $4,096
Buildings and leasehold improvements 2–40 41,486 39,889
Telephone equipment 3–50 714,246 649,465
Cable equipment 3–20 12,190 10,287
Furniture and equipment 3–34 22,718 19,219
Vehicles and equipment 3–20 27,458 25,105
Computer software 3–5 6,880 11,861
Total property, plant, and equipment 829,234 759,922
Accumulated depreciation (582,970) (517,305)
Net property, plant, and equipment $246,264 $242,617
The telephone company composite depreciation rate for property and equipment was 7.29%, 7.38%, and 7.32% in 2006, 2005, and 2004, respectively.
Depreciation expense from continuing operations, excluding amortization of intangible assets and previously disclosed deferred billing system credits, for the
years ended December 31, 2006, 2005, and 2004 was $56.1 million, $53.5 million, and $50.3 million, respectively.

The Company’s non-current investments at December 31, 2006 and 2005 consist of the following:
 

Equity method investments in cellular companies and partnerships:
Orange County—Poughkeepsie Limited Partnership $5,006 $4,138
Chouteau Cellular Telephone Company 28 46
Illinois Valley Cellular RSA 2, Inc. — 1,409
Syringa Networks, LLC 1,277 1,063
Other equity method investments 961 41
Investments in securities carried at cost:
RTB stock —22,796
CoBank stock and unpaid deferred CoBank patronage 3,630 4,664
RTFC secured certificates and unpaid deferred RTFC patronage 263 480
Southern Illinois Cellular Corp. —4,552
Other nonmarketable minority equity investments 166 55
Nonqualified deferred compensation plan assets 726 564
Total investments $12,057 $ 39,808
76